Samsung Might Have To Delay New Phone And Tablet Launches After Losing To Apple

Aug. 25 (Bloomberg)
-- Samsung
Electronics Co. may need to delay introducing new mobile devices
so it can make design changes after a U.S. jury ruled that the
world’s top maker of smartphones infringed Apple
Inc. patents.

Apple yesterday won a $1 billion judgment that may also halt U.S.
sales of Samsung’s mobile products. The companies return to court
next month for a hearing on Apple’s request for a permanent ban
on devices including Samsung’s Galaxy
Tab 10.1.

Samsung vaulted to the top of a global smartphone market valued
at $219 billion by Bloomberg Industries by introducing a variety
of Galaxy models using Google
Inc.’s Android
software and gaining share over Apple’s more-limited product
range. The Suwon, South Korea-based company may have to rush to
change products under development, leading to delays as it seeks
to widen its lead.

“Samsung will have to change some products in its pipeline,”
Chang In Whan, president of Seoul-based KTB Asset Management Co.,
which oversees the equivalent of $5.8 billion, said by phone
today. “There could be delays in developing and releasing new
models at a time when products are coming out every six months.”

Samsung’s schedules for debuting new products won’t be affected
by the verdict, James Chung, a Seoul-based spokesman for the
company, said today by phone.

Galaxy Note

Samsung has gotten around other sales bans by modifying some
features of its products. The company last year changed the frame
of a Galaxy tab model and the location of speakers after Apple
won an injunction banning its sales in Germany.

The global lineup for the rest of this year includes the next
version of the Galaxy Note, which sold more than 10 million units
in less than a year. The company began selling a tablet edition
of the Note this month, following the May release of the
Galaxy S
III, the newest version in its bestselling smartphone series.

Samsung -- the largest maker of computer-memory chips,
flat-screen panels and TVs -- plans to spend 25 trillion won ($22
billion) this year in capital expenditure to boost manufacturing
capacity, including 15 trillion won for chips and 6.6 trillion
won for flat-screen panels used in smartphones, tablet computers
and televisions.

“Samsung has deep pockets and they are going to change some
designs up,” said Michael Risch, a patent law professor at
Villanova University in Pennsylvania. “Not being able to copy may
make them do better things than Apple.”

HTC Devices

The verdict may affect other makers of Android-based devices.
Apple has sued other smartphone makers, including HTC Corp.,
the world’s fourth-largest smartphone maker that generated $15.8
billion in revenue last year mostly from selling phones such as
Desire and Sensation.

“HTC would need to look very closely at the patents in question
with Apple and see which may be similar to those with the Samsung
case,” said Marcus Clinch, an intellectual property lawyer at
Eiger Law in Taipei who is not involved in any of the cases.
“Having Samsung’s products banned in the U.S. may be a bigger
danger to HTC than the damages award because of the precedent it
sets for the industry.”

Two of the patents in the case brought by Apple against Samsung
are also part of the iPhone
maker’s case targeting more than a dozen HTC devices before the
International Trade Commission. HTC declined to comment in an
e-mailed response to queries.

Android Issues

“This is an issue for the whole Android camp, not just for
Samsung,” Seo Won Seok, a Seoul-based analyst at Korea Investment
& Securities Co., said by phone.

Apple, based in Cupertino, California, won less than half the
damages it sought from the first U.S. jury verdict in the fight
to dominate the global smartphone market, though U.S. District
Judge Lucy Koh, who presided over the four-week trial in San
Jose, California, could later triple the damages under federal
law. Samsung avoided a finding of damages for antitrust
violations or breach of contract.

Samsung will ask the judge to overturn the verdict and, if she
doesn’t, will appeal the case, Mira Jang, a spokeswoman for
Samsung, said in an e-mail.

The “verdict should not be viewed as a win for Apple, but as a
loss for the American consumer,” Samsung said in a separate
e-mailed statement. “It is unfortunate that patent law can be
manipulated to give one company a monopoly over rectangles with
rounded corners, or technology that is being improved every day
by Samsung and other companies.

‘Investor Uncertainty’

Apple is Samsung’s largest customer, even as they compete selling
phones that allow users to surf the Web and play games, and fight
in courts on four continents over patent infringement claims.
Apple accounts for about 9 percent of Samsung’s revenue, making
it the company’s largest customer, according to data compiled by
Bloomberg.

Koh set a hearing for Sept. 20 on Apple’s request to bar U.S.
sales of Samsung products. She ordered Apple to file a one- page
chart by Aug. 27 identifying which devices it seeks to ban.

“A final decision would’ve been less burdensome,” Heo Pil Seok,
chief executive officer at Seoul-based Midas International Asset
Management Ltd., which oversees $5 billion, said by phone today.
“It’ll take some time for an actual sales ban to take effect, and
Samsung will appeal, making it a long-term fight.

“This will be an uncertainty for Samsung, and investors hate
uncertainty the most,” he said.